Weekly Review, Feb 1 2009

  @ibtimes on February 01 2010 5:16 AM

The Dollar gained versus all majors as Risk Aversion grew and strong economic data from the U.S was released. Stronger than expected 4th Quarter GDP results contributed to the Dollar's strength and to speculations a rate hike will be sooner. Fed Chairman Bernanke was voted for second term with 16-7 as all democrats expect Merkley voted yes. The momentum is still with the Dollar but the week ahead is packed with economic data that could change traders' risk assessment. NASDAQ and Dow Jones declined by -2.63% and -1.04% respectively. Crude Oil dropped by -2.3% the past week closing at 72.89$ a barrel and Gold (XAU) declined by -1.1% closing at 1080.90$. Looking ahead, ISM Manufacturing PMI is expected stronger on Monday with 55.5 versus 54.9 prior. Pending Home Sales are expected with 0% on Tuesday. ADP Non-Farm Employment Change is expected with -36K versus -84K prior and will be released on Wednesday. Unemployment Claims are expected slightly lower on Thursday along with Factory Orders. Most attention will be focused on Nonfarm Payrolls and the Unemployment Rate on Friday.

The Euro fell by -2% versus the Dollar as concerns about Greece's debt crisis rose and lowered confidence in the Euro zone. The ECB's Interest Rate decision will be the main economic event this week but news about other troubled European Union member's debts such as Ireland Spain and Portugal could extend the Euro's fall. Overall, EUR/USD traded with a high of 1.4194 and a low of 1.3851. EUR/USD has reached its 200 weekly moving average that could act as support and is trading in oversold RSI conditions on the daily chart. The downtrend is still strong but a correction due to oversold conditions is possible. Looking Ahead, Final Manufacturing PMI is expected unchanged on Monday. German Retail Sales are expected stronger on Tuesday. ECB is expected to announce its Interest Rate Decision will remain unchanged at 1% on Thursday. German Industrial Production is expected on Friday.

The Pound weakened by -0.8% versus the Dollar and gained versus the Euro. UK GDP showed a return to growth but came out weaker than expected. GfK Consumer Sentiment showed UK sentiment is improving. Nationwide HPI rose for a 9th straight month. BOE might announce the Q.E program will end, which will strengthen the Pound, but if the program will be increased the Pound is expected to fall. Overall, GBP/USD traded with a high of 1.6276 and a low of 1.5936. GBP/USD is near its 200 weekly moving average that could act as support near 1.5830 along with the last two bottoms the pair has made in that area. Looking Ahead, Manufacturing PMI is expected unchanged on Monday along with Net Lending to Individuals. Construction PMI is expected stronger on Tuesday. Services PMI will be released on Wednesday. The main economic event this week will be MPC Rate Decision on Thursday which is expected to remain unchanged at 0.5% and the Asset Purchase Facility is also expected unchanged with 200B. PPI Input and Output will be released on Friday.

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